Legal Haze Clouds Fax Marketing
Though the use of fax marketing seems common, many marketers are surprised to learn that interstate transmission of unsolicited faxes is illegal unless the sender has the advance permission of or a pre-existing business relationship with the recipient. Determining exactly what federal law requires and how to comply remains difficult, but marketers may get some relief through a recent guideline published by the Direct Marketing Association.
State and federal law: Where does it stand? First, a summary of federal law, which is in flux. The Telephone Consumer Protection Act makes it illegal "to use any telephone facsimile machine, computer or other device to send an unsolicited advertisement to a telephone facsimile machine." Marketers are liable for up to $11,000 per violation.
However, in March, a federal judge in Missouri ruled that fax ads are commercial speech protected under the First Amendment and that the TCPA was unconstitutional because it went further than necessary in curtailing business' rights to commercial speech. The lawsuit that produced the ruling was brought by the Missouri attorney general against a company known as American Blast Fax. Because courts in other states have found that the TCPA is constitutional, the attorney general is appealing the ruling, and the matter could reach the U.S. Supreme Court.
Remember that most states also have laws modeled after the TCPA that can affect intra-state fax transmissions. Some states have twists to their rules. For example, New York prohibits fax marketing unless there is a prior business relationship and the fax is less than five pages.
Meanwhile, the Federal Communications Commission is continuing to enforce the TCPA while the courts decide its constitutionality. Twice this year, the FCC assessed seven-figure fines against alleged violators. In January, it imposed a $1,107,500 fine against 21st Century Fax(es) Ltd. for faxing unsolicited ads, and in August it announced a $5.4 million fine against Fax.com.
A trillion-dollar class action. Besides FCC enforcement, the TCPA lets private parties sue for unsolicited faxes. In September, a wealthy entrepreneur, Steve Kirsch, initiated a class action against Fax.com that claims literally trillions of dollars in damages based on the company's alleged millions of violations of the law, with each unsolicited fax transmission constituting a separate violation. Fax.com's situation shows that non-compliance with the TCPA can be risky.
With huge numbers being thrown around amid unclear authority, the DMA has tried to clarify the situation by publishing a fact sheet to aid direct marketers who seek to comply with the TCPA's provisions. In easy-to-understand language, the sheet makes clear that the TCPA forbids sending faxes to prospects, consumers or even other businesses without prior contact. What type of contact makes the sending of fax ads acceptable?
Even with customers, the TCPA requires that a sender of unsolicited faxes receive customer permission before sending such a fax. If the sender wants to send a fax to someone it has an established business relationship with, consent is still a necessity. According to the DMA, the simplest way to get customer permission to send such faxes is to inform them, when establishing the relationship, that fax solicitations will be sent and to provide them with a chance to opt out.
All faxes -- unsolicited and solicited -- whether sent by fax machine or computer, must include the date and time sent, the name of the company sending the fax and the telephone number of the sender. This information must appear either on the first page or in the margin of each page sent. According to the DMA fact sheet, these rules apply even if the ad is being faxed to a computer's internal fax, an e-fax account or another device.
Hiring another company to actually send the faxes will not provide safety as the company responsible for the content of the fax remains primarily liable. However, if the fax broadcaster has a high degree of involvement or actual knowledge of a TCPA violation and has not taken steps to prevent it, the FCC has ruled that the broadcaster will be held liable as well as the sender.
Though the Missouri decision provided hope to senders of faxed ads that restrictions may be relaxed, the best advice for now is to take the TCPA and the penalties it carries very seriously. The FCC does, and so do class-action plaintiffs' attorneys.